Candace King Weir, founder of the Albany-based investment bank C.L. King & Associates and one of the wealthiest residents of the Capital Region, will pay the U.S. Securities and Exchange Commission $2.2 million to settle accusations of improper stock trading disclosures and that she retaliated against an employee who alerted the government to the practice.

The trading in question involved another Albany-based money management firm that Weir owns called Paradigm Capital Management that oversees $1.7 billion in investments, including a $275 million hedge fund called PCM Partners LP.

"We are pleased to resolve this matter and have it behind us," Paradigm said in a statement issued Monday. Weir was unavailable for comment.

According to the SEC, Weir, who acts as chief investment officer of Paradigm Capital, did not adequately disclose to her hedge fund clients that she was selling stocks in the hedge fund that had incurred loses to C.L. King.

Although the trades themselves — used to offset trading gains by the hedge fund for tax purposes — were entirely legal, they created a conflict of interest for Weir because she also owned the brokerage that was buying the shares.

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But most of the intrigue of the case stems from the alleged punishment by Weir and other executives at the company of its former head trader, James Nordgaard, who contacted the SEC in March 2012 about the lack of disclosure with the trading.

When Nordgaard revealed to his supervisors that July that he had informed the SEC, he was asked to resign. And when he did not, he was taken off the trading desk and given a lowly compliance job, according to the SEC.

After a month, Nordgaard resigned. He filed a civil lawsuit against Weir and her companies, which also have offices in New York City, that fall, although he dropped it a few months later.

Nordgaard, who lives in New Jersey, has not worked since, although he stands to make between $300,000 and $400,000 through the SEC's whistle-blower reward program.

Weir's late husband, David Andrew Weir Jr., once owned Pepsi-Cola Allied Bottlers of Albany, one of the largest bottling companies in the United States until it was sold to Pepsi in 1998. Candace King Weir built a successful investment and trading career, starting the brokerage C.L. King in the 1970s and Paradigm Capital in the 1990s.

Of the $2.2 million settlement, $1.7 million will go to compensate clients of the hedge fund. The rest is for pre-judgment interest and a $300,000 fine.

Weir also has to hire an independent compliance consultant to oversee Paradigm, although she will still be allowed to operate the firm going forward without restriction.

"We will continue to exercise our anti-retaliation authority in these and other types of situations where a whistle-blower is wrongfully targeted for doing the right thing and reporting a possible securities law violation," said Sean McKessy, chief of the SEC's whistle-blower program.